Geopolitics - Oct 2

Oil and Politics in Iran, Iraq and RussiaWalid Khadduri, Al-Hayat Oil prices stabilized at $60 last week in the absence of any important factor that can affect them, whether positively or negatively, despite the meager reduction in the production of Nigeria and Venezuela. The oil market, like all strategic materials markets, is affected by industrial, natural, and political factors. ..

This change in attitude of the West, and the US in particular, toward Iran reflects US disappointment in policies which Washington had endorsed in the last few years. Washington, together with neoconservative research institutes, viewed that the role of the Gulf countries, especially Saudi Arabia, should be reduced within the international oil industry.

The centrepiece of this proposal was to increase production from the two main countries that still possess huge, confirmed oil reserves, namely Russia and Iraq. The idea was to open the way for Western oil companies investing in Russia, taking advantage of the liberal laws enforced in the 1890s, changing the political regime in Iraq, and opening the door to foreign investments.

However, things did not develop the way Washington had wanted, neither in Moscow nor in Baghdad.

Last week, Russian oil authorities withdrew the drilling license of Dutch-British Shell in the giant Sakhalin-2 development project, under the pretext that the project poses danger to whales living near the Pacific coast Northeast of Russia. The real reason is an attempt to give a greater role to Russian companies in the project. ..

Oil related provisions in the [Iraqi] Constitution were formulated in a dubious and vague manner open to multiple interpretations. This raises doubts whether those who drafted the Constitution have a real intention to build an integrated Iraqi oil industry that takes into account the interests of provinces and governorates on the one hand, and the interests of the Iraqi people as a whole on the other, as stipulated in the Constitution. ..Dr Walid Khadduri is an energy expert and Director of al-Hayat business desk. (1 Oct 2006)

Having won Mexico's presidency by the slightest of margins, Felipe Calderon will take office in two months with an ambitious agenda he says will create jobs, reduce poverty and woo the millions of Mexicans who believe his victory to be a fraud.

Pulling that off will take all the courage and political skill Calderon can muster.

But he'll also need something else: The flood of oil income that helped keep Mexico's government and economy afloat during the six-year term of outgoing President Vicente Fox.

But world oil prices are falling from the stratosphere.

And Mexico's crude production may face dramatic declines in the next few years as its most important fields deplete. (30 Sept 2006)Interesting detail once the obligatory clamor for investment is covered – Houston after all does make a little money from oil.–LJ

Professor Peter Odell called for creation of a new UN body that would police energy markets.

Odell, an energy economist, says ExxonMobil is also vulnerable to a Chinese takeover as the large UK and American stock-listed oil groups lose their influence. ..

He believes Western oil companies have endangered their own survival by skimping on investment and using their cash for share buybacks and “extortionate” executive remuneration packages.

Professor Odell believes the need for better order in global markets will eventually lead to the creation of a United Nations International Energy Organization which will include input from OPEC and others. (2 Oct 2006)Pr Odell puts the world oil production peak in 2035, and recently wrote in the UK Guardian, “The creation of additional national income through full exploitation of hydrocarbon resources seems the only way to sustain the subsidies required for the establishment of a low-carbon economy.” A low carbon economy that requires lots of carbon to create it? Sounds like 'sustainable growth'.-LJ

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